Notable information for the salaried class How to avoid income tax under the new system: understand the steps

Notable information for the salaried class How to avoid income tax under the new system: understand the steps

Notable information for the salaried class How to avoid income tax under the new system: understand the steps

The budget will soon be released. On February 1st, Finance Minister Nirmala Sitharaman will deliver the last budget of the current Modi administration. The new tax system was established the default tax system in the previous year's budget. However, did you realize that even under the new tax structure, you may save income tax?

The interim budget will be presented by Finance Minister Nirmala Sitharaman this year because of the Lok Sabha elections. What is this year's major budget announcement? Will there be a rise in the income tax exemption? This will be revealed on the same day, but in the meanwhile, you should be aware that even under the "new tax regime" the nation has put in place, you may save income tax. Would you want us to explain how?

Prime Minister Narendra Modi’s administration has established a new income tax structure in the nation in the budget of 2020. It was referred to as the "new tax regime." The tax system was made simpler for the public under this new arrangement. Meaning that under this system, the majority of your income will be tax-free if you choose not to claim any savings, loans, or other tax advantages. To put it simply, you are not entitled to receive tax benefits on savings or other amounts under this scheme.

Tips for reducing income taxes under the "New Tax Regime"

Even under the "New Tax Regime," income tax may now be avoided. In her budget statement last year, Finance Minister Nirmala Sitharaman first mentioned the new tax structure as "default." Furthermore, the new tax system included a new term called "tax benefit." According to the "default" system, you will be required to pay taxes under the new system each year if you do not choose the "old tax regime" at the start of the fiscal year.

With this, the Finance Minister began granting employed individuals the advantage of "Standard Deduction" under the new tax structure. Those in employment began to get the standard deduction of Rs 50,000 in this as well. It was formerly limited to the previous tax system. People's income up to Rs 7.5 lakh really became tax-free under the new tax system after this adjustment by the Central Government.

There isn't another tax exemption offered by this method, however. However, after the 2023 modifications, family pensioners were also granted the standard deduction under the new tax structure. On Rs 15,000 or one-third of the pension, whichever is less, they are eligible for tax relief. The salaried class has been granted an additional exemption under the new tax structure. They get a tax break on the NPS payment made by their employer.

Intent to implement a new tax system

In order to give the people greater control over their money, the Modi administration implemented a new tax structure. Its goal was to boost the economy's demand. As a result, the government ceased offering savings rebates. The nation's citizens are encouraged to save as much money as they can under the previous tax structure. The new tax structure places a strong focus on encouraging spending.